UK's Ashtead plans New York listing, profit warning spooks investors
Expects U.S. listing move in next 12-18 months
Joins growing number of UK firms listing in US
To start share buyback of up to $1.5 bln
HY profit down 4%, slightly below market view
Shares fall as much as 14.3%
Rewrites throughout, updates share move
By Aby Jose Koilparambil and Yadarisa Shabong
Dec 10 (Reuters) -Ashtead AHT.L is proposing to move its primary listing to New York from London, the equipment rental company said on Tuesday, as it also cut its revenue and profit expectations on persistent weakness in the U.S. construction market.
The profit outlook downgrade sent Ashtead's shares down as much as 14.3%, while its plans to move its listing to New York will be another blow for the London stock exchange. It would join a growing list of companies moving away from European listings in favour of U.S. markets, where valuations could be higher.
Ashtead, the second largest U.S. equipment rental company, said revenue for the year ending April is now expected to grow in the range of 3% to 5%, down from its earlier expectation of 5% to 8% growth.
As a consequence, profit for the year ending April 2025, will be lower than previous expectations, it said, without giving further details.
Equipment rental firms like Ashtead have faced profit margin pressures as a slow recovery in U.S. commercial construction, high interest rates, and ongoing supply chain issues, offset strength in mega projects and hurricane response activity.
Donald Trump's U.S. election victory has raised expectations for increased construction activity driven by his America first rhetoric, but the impact won't be immediate.
"We think it would be just too fast to expect the local construction market to rebound in the second half of our fiscal year," CEO Brendan Horgan told analysts.
Ashtead shares tumbled nearly 13% to 5,468 pence by 1500 GMT.
"The downgrade is disappointing with investors believing we were through the worst of the downgrades," J.P.Morgan said in a note.
'MOVING WEST'
Ashtead, which makes most of its profits in the U.S., said it would discuss the listing plan with shareholders in the coming weeks and expects the primary listing move to be implemented in the next 12-18 months.
"The centre of gravity of the group has been moving west over a long period of time, and today, we are, to all intents and purposes, a U.S. company," Horgan said in the analyst call.
Analysts were largely unsurprised by Ashtead's plan to move to a U.S. listing.
"It is obviously going to be a blow (for London), and it is almost as if it is a ripple effect where one company sees what has occurred for another and the benefits that they have had on valuation," said Morningstar analyst Matthew Donen.
Ashtead said it would retain a UK listing in the international companies segment.
Established in England in 1947, Ashtead, listed in London since 1986, expanded into the U.S. by acquiring Sunbelt Rentals in 1990. It became a major U.S. equipment rental firm after several deals in the early 2000s.
As of Monday, Ashtead's market value was nearly $35 billion, compared to United Rentals', the leading U.S. player, at about $54.85 billion.
Half-year pre-tax profit fell 4% to $1.26 billion, slightly below a company-compiled analysts' consensus estimate of $1.29 billion.
Ashtead also announced a $1.5 billion stock buyback.
Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; editing by Savio D'Souza, Jason Neely and Susan Fenton
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
